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1.
July
3,
2017
Chicago,
IL
USA
For
Immediate
Release
WHY
WE’RE
OPEN-­‐SOURCING
CONTRAXSUITE™
LEGALTECH
IN
THE
MODERN
INFORMATION
ECONOMY
I.
OUR
ANNOUNCEMENT
Over
the
last
decade,
we’ve
spent
many
thousands
of
effort-­‐hours
developing
the
contract
analytics
and
document
analytics
tools
that
we
use
with
clients.
These
tools,
based
on
enterprise-­‐
quality
open
source
frameworks
for
natural
language
processing,
machine
learning,
and
optical
character
recognition,
have
allowed
us
to
quickly
and
easily
attack
many
problems,
from
securities
filings
and
court
opinions
to
articles
of
incorporation
and
lease
agreements.
Today,
we
are
proud
to
announce
that
we
plan
to
open
source
the
development
of
our
core
platform
for
contract
analytics
and
document
analytics
-­‐
ContraxSuite.
Starting
on
August
1st,
this
code
base
and
our
public
development
roadmap
will
be
hosted
on
Github
under
a
permissive
open-­‐source
licensing
model
that
will
allow
most
organizations
to
quickly
and
freely
implement
and
customize
their
own
contract
and
document
analytics.
Like
Redhat
does
for
Linux,
we
will
provide
support,
customization,
and
data
services
to
"cover
the
last
mile"
for
those
organizations
who
need
it.
We
believe
that
a
very
important
future
for
law
lies
in
its
central
role
in
facilitating
and
regulating
the
modern
information
economy.
But
unless
we
start
treating
law
itself
like
the
production
of
information,
we’ll
never
get
there.
Before
we
can
solve
big
problems
with
smart
contracts,
we
need
to
start
by
structuring
existing
legacy
contracts.
We
hope
our
actions
today
will
help
lawyers,
companies,
and
other
LegalTech
providers
accelerate
the
pace
of
improvement
and
innovation
through
more
open
collaboration.
II.
THE
RISE
OF
THE
OPEN
SOURCE
ECONOMY
Over
the
course
of
human
history,
many
models
of
economic
development
and
innovation
have
emerged.
Some
of
these
models,
like
the
public
stock
company,
are
quite
new
in
the
scheme
of
things.
Others,
like
the
community
of
"natural"
philosophers
(scientists)
or
mutual
insurance,
are
very
old.
But
in
all
cases
-­‐
whether
intangible
insurance
or
tangible
iPad
-­‐
there
is
a
flow
from
idea
to
execution
to
economic
value.
One
crude
way
of
comparing
these
economic
models
is
to
examine
how
information
is
held
-­‐
publicly
or
privately.
Information,
not
opposable
thumbs,
as
Cesar
Hidalgo
elegantly
explains,
is
the
secret
weapon
of
our
species
–
our
only
defense
against
the
intrinsic
chaos
and
decay
of
the

2.
universe.
And
in
the
mode
of
economic
analysis
descended
from
Adam
Smith,
private
information
is
the
key.
Knowledge
and
know-­‐how
enable
enterprises
to
produce
and
profit.
This
principle
of
private
information
has
guided
most
enterprises
over
the
last
few
centuries,
from
the
coveted
trade
route
maps
of
the
18th
century
to
the
modern
Coca
Cola
recipe.
So
why,
especially
in
the
last
half-­‐century,
have
we
seen
the
"open
source"
or
"peer-­‐to-­‐peer"
model
of
information
grow?
Google,
Apple,
and
Facebook,
three
companies
worth
nearly
two
trillion
dollars
combined,
have
given
away
thousands
of
software
projects
worth
billions
of
dollars
in
effort-­‐hour
cost.
Have
we
all
gone
mad?
Or
is
there
something
else
going
on
–
an
emergent
value
to
holding
knowledge
more
publicly
in
the
modern
world?
There
are
many
attempts
to
answer
this
fascinating
question,
and
these
attempts
both
challenge
and
enlighten
our
understanding
of
human
behavior,
economics,
and
law.
However,
especially
as
it
relates
to
software,
we
lean
on
the
words
of
Prof.
David
Agarwal:
"For
many
[...],
software
is
only
a
semi-­‐finished
good
that
generates
little
value
until
the
code
has
undergone
revision
by
the
user.
Thus,
creating
the
ultimate
finished
product
will
require
a
sequence
of
motivating
incentives."
III.
LAW
AS
OPEN
SOURCE
AND
THE
LAST
MILE
PROBLEM
The
first
sentence
above
is
as
true
of
legal
documents
-­‐
articles
of
incorporation,
operating
agreements,
corporate
filings,
contracts
and
agreements
-­‐
as
it
is
of
software.
While
there
are
thousands
of
resources
for
corporate
governance
or
contracting
available
online,
none
of
these
are
"finished"
goods
for
another
party.
In
some
cases,
"finishing"
may
simply
required
updating
the
parties
and
dates,
like
a
restaurant
microwaving
a
pre-­‐cooked
cut
of
meat.
In
other
cases,
"finishing"
may
actually
involve
novel
structures
or
more
creative
redrafting,
like
a
chef
growing
his
own
produce
or
combining
flavors
in
unexpected
ways.
As
to
the
second
sentence
-­‐
"[...]
the
ultimate
finished
product
will
require
a
sequence
of
motivating
incentives"
-­‐
we
arrive
back
to
ContraxSuite.
Software
products
designed
to
assist
in
the
drafting
and
analysis
of
legal
documents
are
perfect
examples
of
semi-­‐finished
goods.
Alone,
no
software
product
can
incorporate
an
entity
or
enter
into
a
sales
agreement
or
manage
the
geopolitical
risk
of
supplier
networks
(let’s
ignore
Smart
Contracts
and
DAO-­‐like
organizations,
for
now).
Only
with
the
assistance
of
legal
professionals
can
this
semi-­‐finished
software
deliver
value
to
the
organization
and
its
clients.
In
our
experience,
few
legal
departments
and
law
firms
debate
that
their
legal
documents
contain
valuable
information.
Analytics
can
provide
insights
into
a
wide
array
of
opportunities
and
risks.
Standardization
can
remove
frictions
for
core
business
operations
and
increase
the
rate
and
quality
of
transactions.
But
when
you
ask
these
organizations
to
pay
a
per-­‐document
fee
for
software
that
almost
always
requires
additional
customization
or
produces
"unfinished"
results,
their
excitement
turns
into

3.
hesitation.
Contract
analytic
software,
like
Google’s
TensorFlow
or
the
Linux
Kernel,
does
not
generate
value
by
itself;
human
capital
is
required
to
"cover
the
last
mile"
that
actually
solves
the
problem.
This
is
why
data
scientists
have
not
yet
been
put
out
of
business
by
TensorFlow
and
why
Redhat
and
Oracle
still
"sell
Linux"
for
billions
of
dollars
per
year.
We
have
a
"last
mile"
problem
in
the
legal
arena.
Much
like
Linux
and
data
science,
contract
analytics
is
largely
about
the
combination
of
well-­‐known
practices
with
large-­‐scale,
high-­‐quality
data.
Contracts
are
natural
language
encoded
in
either
analog
or
digital
format,
and
this
language
is
unlocked
and
encoded
with
technologies
like
optical
character
recognition
(OCR)
and
natural
language
processing
(NLP).
These
encodings
are
then
mapped
back
to
real-­‐world
business
problems
through
techniques
like
clustering
or
classification,
two
types
of
machine
learning
(ML)
algorithms.
None
of
these
technologies
or
techniques
above
are
proprietary
or
novel,
and
some
version
of
these
ideas
have
been
available
nearly
as
long
as
there
have
been
digital
computers.
The
real
challenge
in
contract
or
other
related
forms
of
document
analytics
is
to
develop
the
so-­‐
called
"training
data"
-­‐
the
set
of
documents
and
labels
used
to
"teach"
the
machine
what
separates
a
lease
agreement
from
a
purchase/sale
agreement
from
a
retirement
benefits
plan.
Herein
lies
the
true
value
of
the
current
software
and
service
providers.
But,
paradoxically,
almost
all
providers
get
their
information
from
one
of
two
sources
-­‐
either
public
sources
of
agreements,
like
the
SEC’s
EDGAR
database
or
evidence
from
public
courts,
or
private
sources
of
agreements
-­‐
their
clients.
Many
organizations
have
therefore
paid
for
the
privilege
to
give
away
their
own
information
so
that
someone
else
can
profit.
By
open-­‐sourcing
ContraxSuite,
we
hope
to
change
this
dynamic.
The
analysis
and
standardization
of
contracts
and
corporate
governance
material
is
key
to
the
transformation
of
our
economy.
But
blockchain
and
Smart
Contracts
aside,
there
are
significant
improvements
in
risk
management,
compliance,
and
profitability
that
can
be
gained
by
treating
contracts
as
valuable
data.
Until
legal
departments
and
law
firms
can
be
"sequentially
motivated,"
to
borrow
Professor
Agarwal’s
language,
we
will
not
see
this
maturation
of
the
industry.
In
the
near
future,
we’ll
be
revealing
more
details
about
this
open
source
strategy
-­‐
including
more
detail
on
academic
and
industry
partnerships,
support
and
customization
services,
and
our
open-­‐
source
license
model.
In
the
meantime,
we
hope
to
get
everyone
thinking
fundamentally
about
how
we
do
business
in
legal
tech.
What
does
the
client
really
want
-­‐
your
software
license
or
a
sustainable
solution?
IV.
A
CHALLENGE
TO
PROVIDERS,
DEVELOPERS
&
CUSTOMERS
While
some
in
the
legal
technology
community
will
certainly
taut
their
ability
to
outperform
our
open
source
framework
on
some
use
cases
today,
we
believe
that
they
will
find
themselves
on
the
wrong
side
of
history.
We
encourage
others
in
legal
technology
and
related
domains
to
follow
our
lead
and
think
hard
about
whether
closed
code
is
really
the
right
strategy.
By
committing
to
open
source
and
allowing
others
to
validate,
improve,
and
maintain
our
shared
infrastructure,
any
gaps
in
quality
or
functionality
will
soon
fade
away.

4.
More
critically,
the
hype
and
"vaporware"
that
pervade
legal
technology
do
a
disservice
to
the
overall
efforts
towards
innovation.
We
would
like
to
move
the
field
forward
through
the
hard
work
of
iterative,
open
methodological
improvement.
This
hype
and
vaporware
has
been
enabled
by
a
lack
of
transparency
and,
to
be
honest,
a
lack
of
sophistication
on
behalf
of
customers,
but
going
forward,
both
the
consumer
and
developer
community
should
be
able
inspect
the
quality
of
any
existing
offering.
Our
co-­‐founders,
as
leading
educators
of
the
next
generation
of
attorneys,
have
committed
to
making
sure
that
the
General
Counsel
and
Managing
Partner
of
the
future
won’t
be
fooled.
Others
can
chase
the
temporary
rents
of
the
middle
game,
but
we’re
here
to
make
moves
that
support
the
long-­‐term
maturation
of
the
overall
legal
industry.
We
hope
you
will
join
us.
Michael
J.
Bommarito
Daniel
Martin
Katz
CEO
@
LexPredict
CSO
@
LexPredict